Tuesday, April 01, 2008

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The then-current heads of both federal antitrust agencies reflected on their tenures during the March 28 enforcement roundtable at the American Bar Association Section of Antitrust Law Spring Meeting in Washington, D.C.

Deborah Platt Majoras addressed the meeting for the last time as FTC Chairman. She had announced her resignation, effective March 30, only days earlier. Majoras stated that the FTC has remained vigilant in enforcing the antitrust and consumer protection laws. She was surprised by criticism, especially from antitrust practitioners, of lax enforcement.

Chairman Defends FTC

In defense of the agency’s efforts, she pointed to the high number of cases that the agency has brought and continued to pursue. Majoras touted the agency’s recent victory in Chicago Bridge & Iron Company case (2008-1 Trade Cases ¶76,019). The Fifth Circuit upheld a Commission opinion ordering divestiture to restore competition in markets for industrial storage tanks following CB&I’s acquisition of certain Pitt-Des Moines, Inc. assets. Majoras said the decision showed that FTC merger analysis was sound.

Chairman Majoras also commented on the Commission’s continued efforts to challenge unlawful single firm conduct. She cited an enforcement action the FTC brought against Union Oil Company of California (Unocal), alleging that the company illegally acquired monopoly power in the technology market for producing a formulation of law-emissions gasoline by deceptively inducing California Air Resources Board to adopt reformulated gasoline standards that substantially overlapped with Unocal’s patent rights. Unocal settled the charges in 2005 (CCH Trade Regulation Reporter ¶15,755).

In closing, Majoras expressed pride in why the FTC did its job during her tenure. She said that the agency resisted political pressure and avoided bringing cases simply to improve statistics.

DOJ Targets Cartels

Thomas O. Barnett, Assistant Attorney General in charge of the Department of Justice Antitrust Division, told attendees that “now is the most dangerous time in the history of the world” to enter into a cartel agreement. The antitrust chief spoke of international cooperation in cartel investigations as well as in engaging with other nations, such as China and India, in the development of antitrust law.

Barnett also voiced his happiness with the Antitrust Division’s advocacy efforts during his tenure, particularly with the amicus curiae briefs the Justice Department has filed with the U.S. Supreme Court and the impact that they have had on the development of antitrust law.

Former Officials Sound Off

A day earlier, several former agency heads from the Clinton and Bush Administrations discussed federal antitrust enforcement at the Chair’s Showcase Program.

Former FTC Chairman Bob Pitofsky said that there had been underenforcement at the agencies during the last four or five years. He noted that the comment was directed primarily at the Antitrust Division. Pitofsky, who chaired the FTC from 1995 to 2001, pointed to the lack of unilateral conduct and vertical restraint cases brought by the Department of Justice during the previous eight years. He did add, however, that Justice Department cartel enforcement was “as good as it gets.” The former Commission chair was critical of the lax merger enforcement, noting that the some concerns had their roots in the Justice Department’s clearance of the Maytag/Whirlpool combination in 2006 (CCH Trade Regulation Reporter ¶50,209).

R. Hewett Pate, former Assistant Attorney General in charge of the Antitrust Division from 2002 to 2005, defended the Division’s recent merger enforcement record. He said that statistics pointing to a downturn in enforcement “prove very little.”

Timothy Muris, who succeeded Pitofsky as FTC Chairman, defended the agency’s enforcement record over the last eight years. He identified the Unocal and Bristol-Myers Squibb Company cases as two very important recent actions. In the case against Bristol-Myers Squibb, the FTC alleged that the drug maker delayed entry of generic cancer drugs through its patent practices. Bristol-Myers Squibb settled the FTC charges in 2003 (CCH Trade Regulation Reporter ¶15,373).

N-Data “Mistake”

Muris did question a recent FTC action, calling the agency’s suit against Negotiated Data Solutions LLC (N-Data) a “mistake.” The agency alleged that N-Data engaged in unfair methods of competition and unfair acts or practices in violation of the FTC Act by enforcing certain patents against makers of equipment employing Ethernet—a computer networking standard used in nearly every computer sold in the United States (CCH Trade Regulation Reporter ¶16,097). Muris suggested that the FTC’s recent successes might be causing it to overreach in its enforcement efforts.

A. Douglas Melamed, a former antitrust chief during the final months of the Clinton Administration, also questioned the wisdom of the N-Data case. He called it a dangerous precedent that could be used in boundless ways. Melamed believed that the alleged victims of the standard-setting conduct, such as Dell Computer, could have taken care of themselves. He saw no injury to competition in the case.